December 1, 2020 – Vancouver, British Columbia – Harvest One Cannabis Inc. ("Harvest One" or the "Company") (TSX-V: HVT; OTCQX: HRVOF) a uniquely positioned cannabis-focused CPG company, is pleased to announce its fiscal Q1 financial results for the three months ended September 30, 2020.

Management Commentary

“Harvest One’s financial performance in the first fiscal quarter demonstrates the positive impact of the Company’s restructuring objectives over the last twelve months. The Company’s financial results are moving in a positive direction with a significant reduction in operating and overhead costs. We have also made improvements on both sides of the balance sheet by improving working capital and reducing liabilities, setting a solid foundation for rejuvenated growth in 2021,” said Gord Davey, President and Interim Chief Executive Officer of Harvest One. “As the Strategic Review approaches conclusion, our leadership team has redefined the Company’s commercial strategy to set positive momentum for our core consumer brands. We are executing many catalysts for growth within the fiscal year as they are critical to our strategic initiatives.”

Financial Highlights:

• The Company reported a $2.99 million net loss from continuing operations during the current quarter compared to a net loss of $5.23 million in the same period last year, resulting in a $2.45 million or 43% improvement and this was mainly driven by significant G&A reduction.  

• On August 26, 2020, Harvest One completed the divestiture of the Duncan facility for cash consideration of $8.2 million. Concurrently, Harvest One commenced a licensing agreement with Costa LLP, the purchaser, to facilitate the production, distribution and sale of the Company’s Cannabis 2.0 product lines under our LivRelief brand which are currently sold through regulated dispensary outlets across Canada.

• In conjunction with the closing of the Duncan transaction, the Company also repaid all principal, fees and interests totaling $3.73 million related to the $1.5 million bridge financing facility due to Costa LLP and $2.0 million loan due to MMJ Group Holdings Ltd.

Subsequent to Quarter End:

• On October 16, 2020, Harvest One completed the sale of its majority interest in Greenbelt Greenhouse Ltd. for net cash proceeds of approximately $2.85 million. Greenbelt is a non-core cultivation asset.

• On October 9, 2020, Harvest One announced leadership changes with Andy Bayfield transitioning to the Board of Directors from his role as Interim Chief Executive Officer and Gord Davey was appointed President and Interim Chief Executive Officer and Director. 

Summary of Key Financial Results

Three months ended September 30
	2020	2019
Select Financial Information (($000’s, except share and per share amounts)	$	$
Net revenue	1,907	2,027
Gross profit	544	389
Expenses	3,534	5,624
Loss from operations	(2,990)	(5,235)
Net loss attributable to common shareholders	(3,754)	(5,261)
Net loss per share – basic and diluted	(0.02)	(0.02)
Weighted average number of Common Shares	215,079,486	213,666,344
Adjusted EBITDA(1)	(1,603)	(3,260)
Total assets	47,705	57,844
Total non-current liabilities	2,108	2,080

1. Defined as loss from operations before interest, taxes, depreciation and amortization and adjusted for share-based compensation, common shares issued for services, fair value effects of accounting for biological assets and inventories, asset impairment and write-downs, and other non-cash items, and is a non-GAAP measure discussed in the “Adjusted EBITDA” section.

Financial Commentary

The Q1 financial results show material improvement over the same period last year and this reflects the disciplined fiscal controls undertaken by the Company in connection with the Strategic Review over the past twelve months.

Although revenue remained relatively flat, primarily due to the impact of COVID-19, Adjusted EBITDA showed a 51% improvement, with a loss of $1.60 million for the current quarter from a loss of $3.26 million reported the same period last year, mainly due to ongoing efficiencies in operating costs reduction in salaries, office and general, and travel expenses.

Cash used in operating activities was $3.28 million for the three months ended September 30, 2020 compared to $10.20 million for the same period last year, representing a 68% decrease. The $6.93 million decrease was due to overhead cost reductions and improvements in inventory management which consumed less working capital.

During the quarter, the Company also made material improvements to its balance sheet with the sale of the Duncan facility for gross proceeds of $8.20 million. As a result, the Company improved overall working capital to support its continued operations and strategic initiatives and reduced both short and long-term liabilities.

The Company will continue to drive internal changes and improvements to strengthen its foundation for long term growth. Management remains focused on prudent capital management and reducing operating cost and overall burn rate while supporting the Company’s ongoing commercial and growth initiatives.

Strategic Update and Key Growth Initiatives

Harvest One has repositioned itself from cultivation and processing to a non-capital-intensive hybrid cannabis CPG operation focused on both OTC non-infused and cannabis-infused products. The Company’s brands including Dream Water, LivRelief and Satipharm have products in sleep, anxiety and pain categories and are distributed and sold in retail channels across Canada, the US, Europe and the Middle East. Throughout the past twelve months, the Company has undergone transformative changes by divesting of capital intensive and nonperforming cultivation assets to create a unique business model within the cannabis space. 

The Company has a strong foundation of well-established consumer brands that are positioned for growth, as the Company looks to execute on key growth initiates throughout the 2021 fiscal year and beyond.

Products and Innovation

Harvest One is focused on developing a robust product mix across both its cannabis-infused and OTC product categories. Pipeline development and product innovation are a key growth component for any CPG Company. The company will remain committed to R&D to ensure a consistent rollout of differentiated product offerings to market. 

The Company plans to expand its OTC consumer offering of Dream Water and LivRelief with new functional and format line extensions, globally. The Company also intends to further develop its cannabis-infused topicals to bolster a leadership position in the market by expanding its offering in Canada.

Satipharm, the Company’s medical and nutraceutical division, plans to introduce new product offerings within the Gelpel category and anticipate introducing new THC based formulations for medical applications.  

Geographical Expansion

The Company continues to explore expansion opportunities in new international markets as each of our brands are readily commercialized into new jurisdictions.

One of the Company’s key initiatives is to leverage Dream Water’s robust distribution network with major retailers, to launch livRelief’s current OTC and infused product offering, into the United States. 

Similarly, the Company intends to leverage Satipharm’s existing distribution network to launch its consumer brands Dream Water and LivRelief into Europe. The Company has also recently signed broker agreements in several international countries including Saudi Arabia and Mexico and will look to initiate further licensing agreements for both its OTC and cannabis-infused versions.

Following the recent receipt of the US patents covering Satipharm Gepell technology, Harvest One will explore partnership arrangements for the commercialization of the brand in North America. Additionally, Satipharm will build on the existing distribution agreement with Health House in Australia to facilitate expansion throughout Asia where regulations allow.

Increased Channel Growth and Retail Coverage

A key priority for Harvest One, which is fundamental to the growth of our consumer brands is to consistently expand its footprint in North America. The Company will continue to increase its retail coverage by adding more distribution partners and explore new channels for growth.

One key initiative is to expand the Broker network throughout the United States to support existing relationships and drive new retail accounts, with the goal of adding a further 10,000 storefronts in 2021 and 2022. The addition of new distribution brokers is imperative to support the expansion of Dream Water but to also facilitate the launch of LivRelief in the United States.

Another priority for the Company is continuing to explore new channels for additional growth for its consumer brands. The Company plans to bolster its e-commerce strategy including placing specific importance on its Amazon channels to capture an increased online market. The Company is also exploring new B2B licensing agreements for the Company’s proprietary delivery technologies including LivReliefs transdermal technology. In Europe, Satipharm will continue to expand its European footprint through increased listings within the pharmacy and grocery channels.

As with any successful CPG company, Harvest One is planning to provide investment in marketing and sales, subject to financial availability to support the Company’s commercial initiatives and drive awareness and advocacy of its core consumer brands.

Management Changes

Mr. Marc Tran is stepping down as interim Chief Financial Officer of Harvest One effective December 1, 2020 to pursue another opportunity within the resources sector. Marc was instrumental in providing effective financial management and strategic direction throughout the Company’s ongoing Strategic Review.

Mr. Jack Tasse has been appointed as Interim Chief Financial Officer effective December 1, 2020, subject to regulatory approval. Mr. Tasse is a Chartered Professional Accountant (CPA, CMA), a Certified Internal Auditor (CIA) and holds a Master of Accountancy in Tax Law from Brock Univeristy and joins Harvest One with over 18 years of experience including advising public companies, leading financial operations, reporting to corporate boards, and preparing companies for capital markets. His experience covers a wide range of industries including cannabis, pharmaceutical and biotechnology R&D/manufacturing.

About Harvest One

Harvest One is a global company that develops and distributes premium health, wellness and selfcare products with a market focus on sleep, pain, and anxiety. Harvest One is a uniquely positioned company in the cannabis space with a focus on cannabis infused and non-infused consumer packaged goods.  Harvest One owns and operates three subsidiaries; Dream Water Global, LivRelief (consumer) and Satipharm (medical and nutraceutical). For more information, please visit  www.harvestone.com.

This press release contains references to “Adjusted EBITDA”, which is a non-GAAP financial measure.

Adjusted EBITDA is a non-GAAP measure used by management that does not have any standardized meaning prescribed by International Financial Reporting Standards and may not be comparable to similar measures presented by other companies. Management defines adjusted EBITDA as the loss from operations, as reported, before interest, taxes, depreciation and amortization and adjusted for share-based compensation, common shares issued for services, the fair value effects of accounting for biological assets and inventories, asset impairments and write-downs and other non-cash items. Management believes that Adjusted EBITDA is a useful financial metric to assess the Company’s operating performance on a cash basis before the impact of non-cash items, and on an adjusted basis as described above.

A reconciliation of the supplemental non-GAAP measure is presented in the Q1 2021 MD&A. The Company believes that the measure provides information useful to shareholders and investors in understanding its performance and may assist in the evaluation of the Company’s business relative to that of its peers. For more information, please see “Non-GAAP Measures” in the Q1 2021 MD&A available on the Company’s profile on SEDAR at www.sedar.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The forward-looking information contained in this press release is made as of the date hereof, and the Company is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

Neither TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accept responsibility for the adequacy or accuracy of this release.

Investor Relations:
Colin Clancy
Investor Relations  
IR@harvestone.com
1-877-915-7934